US stock markets got a good bump on Friday from US Federal Reserve Chairman Ben Bernanke’s much-awaited endorsement of more stimulus action, but still ended lower on a week of lackluster end-of-summer trade.
While Bernanke’s suggestion that the Fed could embark on a third round of quantitative easing (QE3) bond-buying program helped the Friday rebound, it was still his justification — that the economy is really not doing well — that kept a general cloud over the markets.
Trade was flat for three straight days, then sank on Thursday while nearly making up the difference on Friday, rising even before the Fed chief spoke.
The Dow ended Friday down 0.51 percent for the week, to 13,090.84.
The broad-based S&P 500 fell 0.32 percent to 1,406.58, while the tech-heavy NASDAQ Composite ended down a bare 0.09 percent at 3,066.96.
Bernanke and Fed documents had steadily hinted that the Fed could act, raising expectations — though no decision will be made before the Sept. 12 and Sept. 13 meeting of the Federal Open Market Committee, the central bank’s policy board.
However, Bernanke was more glum about the economy on Friday than had been expected.
“The economic situation is obviously far from satisfactory,” he said in a speech in Jackson Hole, Wyoming. “The stagnation of the labor market in particular is a grave concern.”
It was at the same venue two years ago when Bernanke signaled the Fed’s QE2 quantitative easing program, which sent the markets on a 10-month bull run.
However, the economy has faltered since the beginning of this year, and traders have been hoping for more juice from the central bank — though no one is sure it will have the same effect as before.
“Chairman Bernanke’s comments should be taken positively as he indicated a willingness to increase support to the economy,” said Michael James, an analyst at Wedbush Morgan Securities.
James said that QE3 was “more likely than unlikely, based on my reading of his commentary today, and that will continue to be positive for market sentiment next week.”
“We didn’t get a formal announcement for QE3 and the market still remained strong,” Joe Bell of Schaeffer’s Investment Research said. “With some people claiming the rally is dependent on further actions, it’s always a good sign when the market rallies without any Fed actions.”
Confirming that will require more data on the economy, coming up in this week’s holiday-shortened trade — tomorrow is Labor Day.
Tuesday will see the release of the ISM’s manufacturing index for August and data on construction activity in July; on Thursday the ISM’s service sector index comes out.
Friday’s job creation and unemployment figures for August will be the most-awaited numbers, with analysts looking to see whether they echo Bernanke’s sentiment about the jobs market, giving him ammunition to carry into the FOMC meeting to convince stimulus-doubters on the panel.
“With the holiday, it will -continue to be a sentiment-driven market, with an upside bias,” James said. “The labor [report] is going to be the biggest bit of economic data.”
DECOUPLING? In a sign of deeper US-China technology decoupling, Apple has held initial talks about using Baidu’s generative AI technology in its iPhones, the Wall Street Journal said China has introduced guidelines to phase out US microprocessors from Intel Corp and Advanced Micro Devices Inc (AMD) from government PCs and servers, the Financial Times reported yesterday. The procurement guidance also seeks to sideline Microsoft Corp’s Windows operating system and foreign-made database software in favor of domestic options, the report said. Chinese officials have begun following the guidelines, which were unveiled in December last year, the report said. They order government agencies above the township level to include criteria requiring “safe and reliable” processors and operating systems when making purchases, the newspaper said. The US has been aiming to boost domestic semiconductor
Nvidia Corp earned its US$2.2 trillion market cap by producing artificial intelligence (AI) chips that have become the lifeblood powering the new era of generative AI developers from start-ups to Microsoft Corp, OpenAI and Google parent Alphabet Inc. Almost as important to its hardware is the company’s nearly 20 years’ worth of computer code, which helps make competition with the company nearly impossible. More than 4 million global developers rely on Nvidia’s CUDA software platform to build AI and other apps. Now a coalition of tech companies that includes Qualcomm Inc, Google and Intel Corp plans to loosen Nvidia’s chokehold by going
ENERGY IMPACT: The electricity rate hike is expected to add about NT$4 billion to TSMC’s electricity bill a year and cut its annual earnings per share by about NT$0.154 Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) has left its long-term gross margin target unchanged despite the government deciding on Friday to raise electricity rates. One of the heaviest power consuming manufacturers in Taiwan, TSMC said it always respects the government’s energy policy and would continue to operate its fabs by making efforts in energy conservation. The chipmaker said it has left a long-term goal of more than 53 percent in gross margin unchanged. The Ministry of Economic Affairs concluded a power rate evaluation meeting on Friday, announcing electricity tariffs would go up by 11 percent on average to about NT$3.4518 per kilowatt-hour (kWh)
OPENING ADDRESS: The CEO is to give a speech on the future of high-performance computing and artificial intelligence at the trade show’s opening on June 3, TAITRA said Advanced Micro Devices Inc (AMD) chairperson and chief executive officer Lisa Su (蘇姿丰) is to deliver the opening keynote speech at Computex Taipei this year, the event’s organizer said in a statement yesterday. Su is to give a speech on the future of high-performance computing (HPC) in the artificial intelligence (AI) era to open Computex, one of the world’s largest computer and technology trade events, at 9:30am on June 3, the Taiwan External Trade Development Council (TAITRA) said. Su is to explore how AMD and the company’s strategic technology partners are pushing the limits of AI and HPC, from data centers to